Shares of Baidu
Revenue climbed 40% to $184.7 million, while widening profit margins helped net income soar 48%, to $1.80 a share.
Silly analysts. They were expecting a profit of only $1.68 a share on $180 million in revenue. The performance gets even more ridiculous if you back out stock-based compensation and the company's continued losses in Japan. Absent those two line items, Baidu's profit would clock in at a slick $2.06 a share.
It was easy to get nervous after a pair of top executives resigned for "personal reasons" last month. Why would a company's CTO and COO step down -- just 10 days apart -- if Baidu had already completed another monster quarter?
Investors could have also gotten jittery after Sohu.com's
However, Sohu's strength lies in its brand advertising business. Baidu's rewarded for being China's top engine by rolling in more lucrative paid-search sponsorships. Comparing Sohu and SINA
Graphical ads and targeted text spots aren't just marching to different drummers. We're talking about entirely different beats-per-minute metrics.
Oh, and things can still get better for Baidu. If capping 2009 with a 40% top-line surge in the final quarter is welcome news, buckle up those seat belts. China's dot-com darling is calling for revenue to climb by 48% to 52% in the current quarter.
Investors may be licking their chops at Baidu's potential if Google carries through with last month's unlikely threat to pull out of China, but Baidu is clearly doing just fine even with Google around.
As long as China's economy doesn't derail, Baidu offers great -- though admittedly not cheap – first-class seats with a view.
Is Baidu overvalued? Share your thoughts in the comments box below.
Longtime Fool contributor Rick Munarriz has only been to China once, but he relishes admiring its dot-com revolution from afar. He does not own shares in any of the stocks in this article. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.